Between 1995–2001, OECD countries experienced a major break from the declining productivity growth performance in previous decades. Most notably in the United States, productivity growth accelerated sharply, while the variance of output growth rates across OECD countries increased. More dramatically, however, Europe as a whole and Germany in particular experienced, on average, relatively low rates of output and productivity growth, as compared to the past and the rest of the industrialized world, especially the United States. Questions about worker hours and quality contributions to growth are just as much in the forefront of the economic and policy debate as declining research investment, diffusion of information technology, and increased production outsourcing. Productivity is not only a fundamental measure of economic performance due to its measure of how effectively an economy transforms inputs into output. Furthermore, the more productive the factors of production become the greater the return to investment in education or physical capital and the higher a country’s standard of living. In order to investigate the forces that drive productivity growth the sources of sectoral productivity growth, as derived from factor inputs, in particular, the different types of capital (with special emphasis on the role of information and communication technology) are examined. To do so unique raw data from the Ifo Investorenrechnung is employed to establish a productivity database covering the period from 1991 to 2005. It enables the decomposition of German aggregate productivity growth in sectoral performances to determine Germany’s productivity drivers as well as future sectoral trends at the most disaggregated 52-industry level.
Growth Accounting, Index Number Theory, Panel Data Analysis.
German Federal Statistical Office, Ifo Investitionsrechnung.
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